By Moses Kaketo
In late 2015, Airtel Uganda was all set to launch a micro-lending and savings product. A tripartite deal was signed between #CentenaryBank, Comza (an innovative, value-added services and digital-leading platform company that provides services to its customers through mobile phones), and #AirtelUganda.
With the license from the #BankofUganda to operate a financial institution, Centenary Bank was to manage the banking aspect. While #Comza was to provide the finances, given her access to cheap capital from the World Bank. Meanwhile, Airtel Uganda would provide the technology and the customer base.
The country’s number two teleco went ahead to award Centenary Bank an Airtel-Money escrow account as a sign of appreciation. The other commercial banks, feared to venture into the unknown.
The product was tested and found to be satisfactory. The launch came next. The marketing staff at Airtel Uganda was upbeat. The micro-savings program was intended to benefit Airtel in a number of ways, including as a tool for retaining customers. There is extremely little probability that the subscriber will drop the line after they begin saving and borrowing using their SIM card or line. It is a source of income as well. Talk about the microloans’ monthly interest income—that’s a lot of money.
What a brilliant idea that was never implemented because of Airtel Uganda’s disarray and frequent changes in top management.
Stillbirth
Typical of the unending top leadership changes at Airtel Uganda. Yet again, another change came before the product launch.
The new managing director, #TomGutjhar (who was MD from August 2014 to March 2016), decided to fire almost all of the directors in favor of hiring people he believed would help him achieve his goals. However, he was mistaken. He would subsequently come to lament this strategic error. Not surprisingly, after just one year in office, Mr. Gutjhar and his recruits were forced to resign.
Enter the Airtel micro savings and lending product.
Sources say the handover process was not properly handled. Thus, the new directors at Airtel Uganda were to sail in sketchy water. Uganda’s telecom market, which is highly competitive, is coupled with very low customer loyalty.
For example, the then-new Airtel Money director, #PaulLanglois, had to start from scratch as far as the Airtel micro-lending and saving product was concerned. Mr. Langlois did not know where to start. He tried here and there and failed miserably. That’s when Airtel decided to abandon the innovative product. As they say, the rest is history.
The good Samaritan [call them intelligence gatherers] passed on the information to rivals—MTN Uganda.
MTN introduces Mokash
Building on the success of Mobile Money, MTN Uganda, in collaboration with Money for the Poor (#MM4P) and Commercial Bank of Africa (now #NCBA), developed and introduced MoKash, a product meant to close the gap in credit and savings availability in Uganda.
The MM4P is a program that was launched by #UNCDF in partnership with the Swedish International Development Agency (#Sida), the Australian Department of Foreign Affairs and Trade, the Bill & #MelindaGatesFoundation, and The #MasterCardFoundation. The MM4P provides support to branchless and mobile financial services in a select group of LDCs to demonstrate how the correct mix of financial, technical, and policy support can build a robust branchless and mobile financial services ecosystem that reaches low-income people in LDCs.
MoKash registered 83,000 customers in less than 48 hours following its August 9, 2016, launch. Since its August introduction, the product has added 920,000 users at a rate of 15,000 every day. Five months following the introduction, over four billion loans had been disbursed and over eight billion Ugandan shillings had been raised through savings.
Mokash provides customers unparalleled convenience, flexibility, and accessibility to financial credit options, making financial services available at the touch of a button.
The only requirements for MoKash; be a registered MTN subscriber and be active on MTN Mobile Money. Depending on their needs, customers can either save amounts as low as Ugx 50 or take a 30 day micro loan between Ugx. 3,000 up to Ugx. 1,000,000, based on their loan limit updated monthly.
Minting millions
Available information shows that at least five million MTN-Uganda subscribers applied for a short-term loan in 2024. During the same period, MTN-U noted that 34m microloans were disbursed, causing a fourfold increase in the company’s mobile money microlending, which has since 2022 averaged Ugx. 400bn.
‘’Our disbursement of microloans has grown fourfold from an average of Ugx. 400bn in 2022 to Ugx. 1.4 trillion this year [2024].’’ Richard Yego, the Managing Director of MTN MoMo, noted late last year.
Today, #MTNMoMo’s portfolio includes four loan products—#ExtraCash, #MoreCash, More PESA, and #Mopesa—that cater to a diverse range of customers and needs. Mr. Yego also indicated that the average loan size during the 12 months to December 2024 varied depending on the loan type, but overall disbursements averaged Ugx. 42,000, with the majority of applicants falling within the Ugx. 10,000 and Ugx. 30,000 loan bands. Mobile money loans carry varied interest rates ranging from 0.33 percent per day to 9 percent per month depending on the loan type.
Growing further
MTN has already rolled out business-related loan products through a merchant code-supported system. The telco boasts of over 400,000 merchants countrywide.
MTN MoMo has set ambitious targets for 2025, aiming to surpass Ugx. 2 trillion in disbursements. “Our focus for the coming year (2025) is to expand our reach and empower even more customers through financial inclusion,” Yego noted.
The platform has expanded its customer base from 12.06 million to 13.6 million, to reach 40 million active users.
You guessed right; the take-home of MTN Mobile Money Managing Director is way ahead of what most CEOs of commercial banks in Uganda earn monthly.
After seeing MTN and CBA enjoying the fruits of #Mokash, Airtel picked up the pieces and tested a similar product—#Wewole and #QuickLoan. The latter is a partnership with Housing Finance Bank; they were supposed to launch in 2015.
Micro-lending details from other lenders, including Airtel Money commerce, were not readily available.
However, 2023, figures showed that Fintech firms, MTN Mobile Money Uganda Ltd and Airtel Money Commerce Uganda Ltd, collectively reported Ugx. 452.7 billion in profit after tax for the year ended December 31, 2023.
On the other hand, Airtel Money Commerce Uganda Ltd reported a profit after tax of Ugx. 249.8bn for 2023, a rise from Ugx. 216.5bn in the previous year.The firm’s total income climbed to Ugx. 737bn, bolstered by an increase in assets from Ugx. 674.2bn to Ugx. 883.5bn over the same period.
Airtel Money Commerce did not disclose details regarding its customer base or transaction values.
Mr. Japhet Aritho, the Airtel Money Commerce MD, has some homework to do. Otherwise, rivals are driving at 80 km per hour while they are driving at 20 km per hour.
September 2024, Airtel Mobile Commerce Uganda Limited, in partnership with Letshego Uganda, unveiled a digital loan product—“Let’s Go Pesa.” Pesa”—offering loans ranging from as low as Ugx. 20,000 to a maximum of 700,000. Borrowers can repay the loans within 30 days. We are yet to assess the impact of this product.
Tough times ahead.
Airtel Uganda finds itself at a crossroads. They have so many areas to grow and seem to lose focus. They want to grow data, push Airtel Money to reach about five million subscribers, increase her current A, B+ customer base from 20 percent to about 40 percent, fix human resource issues, and above all, get out of Warid’s shadow.
The teleco is also seeking to reduce the churn rate. These areas are tricky considering the current market landscape. It remains to be seen whether they can achieve all this in real time.
Meanwhile, MoMo continues to leverage its internal business processes and artificial intelligence capabilities to create tailored solutions that anticipate and meet customer needs through unique social network analysis studies and customer value management systems.
The Bank of Uganda’s 2024 Financial Inclusion Survey reports that 71% of Ugandans now use mobile money services, up from 61% in 2020. The survey also notes that the value of mobile money transactions has risen to UGX 63 trillion in 2024, up from UGX 44 trillion in 2020.
About the author: The writer is a content creator, marketing, and distribution expert. He sees business in everything. He loves writing business news, reviews, and analyses. He can be reached via WhatsApp at +256782507579.